Saturday, November 24, 2007

Above is a daily chart of the XAU index ( gold/silver stocks ). In the lower pane is the stochastic oscillator. You'll notice that the oscillator is in the buy zone which in my humble opinion means a buying opportunity. In the past whenever this oscillator was in the buy zone (stochs below 25) gold stocks would rally. This indicator isn't perfect but it does help to improve ones timing if looking to buy a pullback like we have now.

Another reason why I am bullish on gold stocks is because gold put in a strong day on Friday and is in an uptrend. The XAU index has also been showing relative strength compared to the stock market. I'm looking for the XAU index to make new highs for the year.. We'll see what happens.

3 comments:

Thanks for sharing your thoughts on the precious metals and commodities. I find it interesting that your chart analysis is bullish on these two markets when most of the “stuff” I read in blogs and articles is instilling fear that a recession will hit commodities hard and the precious metals will get whacked hard also. I just finished reading a good book by Stanley Kroll, “On Futures Trading Strategy”, where he mentions that the noise of opinions from analysts and market letter writers can be so distracting that you get all tangled up and don’t know what to do. His solution is to go into isolation and study his charts and technical indicators. I have really been experiencing this problem the last few days. In particular, when I study the $HUI and $Silver charts they both look extremely bullish to me. A strong breakout on good volume followed by a test of that breakout that held. Today (11/27) both are correcting again and pulling back close to the breakout point. A few days ago I told myself if spot silver pulls back to $14.30 I am adding another long futures contract. Well, of course, this morning we reached that level and the fear instilled in me by the noise was to great and I couldn’t pull the trigger. Unfortunately for me, I am too new at using technical analysis and don’t have the confidence (yet) to go with what my chart analysis says as opposed to the “pundits” wisdom. Problem is some of these guys have been around for years and really know how the game is played. Quite a dilemma for an aspiring “operator” (Stanley’s hero is Jesse Livermore). I guess at this point I will continue to focus on risk management as I continue to gain my confidence. Just wanted to share some thoughts and appreciation for your unemotional objective analysis.

Really great posts! Love your insights as always!If you are bullish on gold, are you bullish on AUD/USD as well? I am thinking about longing some AUD/USD, since the 0.8650 support hold so well, even though 0.8750 neck line was broken. I highly appreicate your guide on this!!!For gold and utility stocks, could you recommend a couple of them? Many many thx!

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